The Disappearing Doctoral Student: Addressing the Shortage of Business Ph.D.s

For the last decade, there has been a growing concern that the business professorate is shrinking. While not everyone agrees that the shortage affects all business disciplines equally, the rallying cry in accountancy has been loud enough to be heard in boardrooms, classrooms, and break rooms across the country—and the data has been strong enough to make the academic community, the profession, and the public sit up and take notice.

For E.B. Altiero, it was an email from her employer that got her attention. As a financial auditor for Ernst & Young for five years, she had been contemplating a career move and was looking for just the right opportunity. Ernst & Young, recognizing the doctoral deficit in accountancy and its potential impact on the profession, was getting the word out to their best and brightest about the Accounting Doctoral Scholars (ADS) Program, a response initiated by the accounting profession to address the looming shortage of accountancy professors.

Altiero read the email and "knew instantaneously" that it was meant for her. The daughter of a university professor, she was familiar with the academic lifestyle and was at a point in her career where she was ready to embrace the challenges and opportunities that it provides.

One of those challenges—the financial one—was made easier when Altiero was selected for the inaugural ADS class in 2009. The program provides a $30,000 annual stipend for four years for 30 outstanding men and women who commit to the professorate. In total, the ADS program has committed to recruiting, selecting, and funding four classes, or 120 new Ph.D. students, from 2009 through 2016, making it a $17 million investment.

Why did the accounting profession feel it was important to take this step? Drastic situations require drastic measures. According to Doyle Williams, the executive director of the ADS program, the shortage is reaching a crisis stage, with a report by the American Accounting Association indicating that there are may be as many as 500 accounting professors becoming eligible for retirement each year in the next ten years and less than 200 graduating from Ph.D. programs every year. Add to that the fact that up to 40 percent of those graduates come from other countries where they might return to teach, and the shortage looms even larger.

Doctoral Deficit

As the idea of the ADS program took shape, the AICPA needed to find funding partners for the more than $17 million required to implement this ambitious program. That's where the boardroom came in.

The accountancy profession, led by the Big 4 as well as 65 other firms and 48 state CPA societies, stepped up to the plate to fund the ADS program. "The profession was very concerned that a shortage of faculty would mean there wouldn't be the teaching talent to adequately prepare students, which in turn would impact the pool of talent entering the firms," says Williams. "Academia is the lifeblood of accounting, with more than 60,000 new graduates entering the job market every year, so the profession has a vested interest in seeing that these young people receive the best training from qualified professors."

That vested interest translated into the sponsoring organizations making a generous $17 million commitment to the ADS program. With the third of four classes getting ready to enter Ph.D. programs at 42 different universities across the nation in the Fall of 2011, nearly 90 scholars will be reaping the benefits of the profession's investment immediately. Down the road, students taught by those scholars and later employed by many of the sponsoring firms will be reaping the benefits of the ADS program as well.

In addition to Altiero, ILLINOIS has three more ADS students, including Tony Bucaro, Keith Czerney, and Stephen Rowe. In the Fall of 2011, three additional scholars will join them.

"Because of the existing shortage of faculty, many schools can only take one accounting doctoral scholar," says Williams. "They just don't have the number of professors to supervise additional Ph.D. students. At universities like ILLINOIS, which is an accounting powerhouse, there is still a strong emphasis on tax and auditing, where much of our shortage exists, so they have the research focus, the faculty, and the reputation that appeals to the scholars."

For Bucaro, who was a partner at Deloitte & Touche when he decided to apply for the ADS program, that's just what he was looking for. "I had researched the top accounting schools and Ph.D. programs and chose ILLINOIS because I knew that the training I would get from such a prestigious program would open doors to me in the future."

Which brings us to another part of the equation—the commitment of the universities in taking on the task of training the professorate.

Mark Peecher stands forward of several doctoral students

"We try to maintain a one-to-one faculty-to-doctoral-student ratio," says Mark Peecher, professor of accountancy. "It's an intense mentoring activity and a substantial commitment on the part of the faculty."

It can be an expensive proposition as well. However, with one of the largest and most successful programs in the country at the undergraduate and master's levels, Ira Solomon, professor of accountancy and department head, explains that making that investment is necessary to ensure
that the ILLINOIS program, and the profession, will have the faculty needed to keep up with the increasing demand for accountancy education.

"It's important both to business and to the academy," Solomon says, "because the profession needs graduates who have had the mentorship, teaching, and academic rigor that comes from strong, dynamic faculty members."

Cost Concerns

Of course, it wouldn't be a true business dilemma if there weren't some economic issues involved, one of which is the opportunity cost students incur, which goes right to the heart of why there is a Ph.D. shortage in the first place.
"Accounting students have great career options and earning potential," says Jerry Trapnell, executive vice president and chief accreditation officer for the Association to Advance Collegiate Schools of Business (AACSB). "It's extremely difficult to make a decision that means taking four, five, or even six years away from that earning potential and on top of that possibly incurring costs for your education and living expenses. The ADS program has helped address this problem, but we need to continue to have dialogue on how we can minimize opportunity costs for students."

The willingness, or unwillingness, of universities to shoulder the significant costs of providing financial and faculty support to all incoming doctoral students also has an impact on the shortage.
"When there is financial stress on institutions, the funding for doctoral programs is one of the first things to dry up," says Peecher. "While this isn't true at ILLINOIS, where we can fund our Ph.D. students, it has been true for other institutions."

Additional pressure comes from the fact that Ph.D. programs aren't revenue generators, and that most universities don't hire the Ph.D. students they've trained in order to ensure an infusion of new ideas and perspectives, so making the investment is a challenging proposition.

Add to that the fact that there are state budget crises across the country, impacting both funding for programs and salaries for faculty, and you see the dilemma many business deans are facing.

"By the nature of the intensive learning process involved, Ph.D. programs represent a very high cost form of education," says Larry DeBrock, professor of business administration and dean of the College of Business. "However, the fact that you see business schools maintaining these programs during this period of budget stress is evidence of the great benefits Ph.D. programs provide to the faculty and to the research mission of the units."

Building Bridges

With so many challenges, what are some ways to stem the tide of the doctoral deficit? Some steps rely on the generosity of the profession, not only through their funding efforts of the ADS and other programs, but through their initiatives to encourage some of their most talented staff to consider the professorate.

Rowe, who was an audit manager at KPMG before entering the Ph.D. program at ILLINOIS, says supervisors and partners at his firm provided strong encouragement and support throughout the ADS application and selection process. "The firm is a financial supporter of the ADS program and was very excited to learn that I had been accepted."

The firms' willingness to supply the academy with research data is also an important way to encourage the work of doctoral students.

"The ADS program is a great step, but also just a first step, by the profession," Peecher says. "Growing the pool of qualified doctoral students will do little to address the faculty shortage unless these new students subsequently have access to relevant empirical data for conducting research. Without data, it's a bit like hatching chicks but not feeding them," he says.

Bucaro agrees. "My firm was very supportive of my choice, as I think is true of all the firms who have made the financial investment in the ADS program," he says. "However, the more the firms support not just the training of the Ph.D. but the ongoing research of academicians as well, the more successful we'll be in increasing the numbers of Ph.D. students."

Another initiative that addresses the shortage of doctoral students is the Ph.D. Project, an effort that has focused on increasing the numbers of minority business school professors through information, support, and preparation. Since the establishment of the Ph.D. Project in 1994, the ranks of African-American, Native American, and Hispanic-American business professors has tripled—from 294 to more than 1,000.

AACSB Bridge Programs provide a two-tiered initiative that offers alternative avenues for professorial preparation. The first is the academically qualified (AQ) portion, which provides business training for those with a Ph.D. in another discipline and awards an AACSB-endorsed certificate that enables them to teach in one of the association's 607 accredited business schools.

Trapnell explains that while the AQ program is controversial because it's not the traditional model of doctoral education, "It is a creative response to addressing the shortage. It may not be an ideal solution, but it does have its place. For instance, an industrial psychology Ph.D. might translate well to organizational behavior or human resource management," he explains.

The second tier of the bridge program is the professionally qualified (PQ) portion, which trains experienced business professionals for work in the classroom. "The PQ bridge takes those who are judged to be professionally qualified, that is, those who have a master's degree and significant experience in terms of breadth of work and duration, and gives them an intense orientation to the academic community," says Trapnell.

Again, while the PQ bridge isn't a solution to the shortage, it can provide a shot in the arm, especially for those schools "that, unlike ILLINOIS, do not offer doctoral programs, but focus on providing high-quality professional degrees in accounting at the under-graduate and masters' level," says Trapnell. "Those schools still provide a strong education, but often they must choose from a much smaller pool of faculty applicants to begin with," he explains.

So while the PQ program creatively fills a need in closing the gap in faculty shortages and in bringing a practical perspective to the classroom, everyone agrees that it isn't a substitute for, but rather an important complement to, Ph.D.-qualified professors.

"It's important that the education of undergraduates and master's degree candidates be facilitated by instructors with Ph.D.s who are relatively independent of the practice side of the profession," says Peecher. "That independence makes it easier to assess various aspects of the audit function and its regulatory environment from multiple stakeholders' points of view. Plus, Ph.D.-qualified instructors have a research focus, which keeps them current on what's pushing the frontiers of tax planning, fraud detection, and other important changing business conditions."

It's All Academic
When you've been in the accounting profession for several years, what is it that you need to know to make the leap to an academic career?

The ADS focuses some of its efforts on just that question. According to Williams, "Our orientation conference is a very valuable aspect of the program because it provides an opportunity for potential scholars to engage in an honest conversation with current Ph.D. students and professors about what the academic life is like, both the challenges and the rewards."

For Czerney, an external audit manager for KPMG before he came to ILLINOIS to pursue his Ph.D., the ADS conference was "very informative and helped me better understand the demands of a Ph.D. and those placed on a researcher. Plus, it provided me with my first real opportunity to network with accounting professors from various universities."

That's the goal, says Williams. "We want to provide a way to help young professionals make informed decisions in a structured way before they invest the time and effort in making that change and before others make the investment in them."

Czerney came away convinced the career change was right for him. "After considering my options, I felt as though academia would provide me with new professional and intellectual challenges that I would not be able to find in another position in the industry. As an academic, there will always be new research questions and new students to challenge me."

Rowe also says the challenge was appealing as was the opportunity to carve out his own niche. "During my time in the profession, I especially enjoyed teaching regional and national training through KPMG. I also enjoyed the technical side of accounting and auditing along with constant learning. I view entering a career in academia as allowing me to focus even more of my effort on the aspects of my professional experience that I enjoyed most," he explains.

Perks of the Professorate

It's a career that seasoned professors agree is a very satisfying one. For Williams, serving as executive director of the ADS program is his latest role in a long and distinguished career in accounting. He founded the School of Accounting at the University of Southern California, served as a dean of the business schools at both USC and the University of Arkansas, and served terms as chair of the AACSB and board member of the AICPA. While he could retire, he continues to lead the ADS program, "because it's critical to the future of the profession and higher education in accounting that we have the talent to teach tomorrow's leaders."

What can that faculty talent expect from the academic life? "Being a professor allows you to leave a legacy in terms of impact on students and contributions through research that over time influence the profession in ways you might not even be aware of, and you can do that without giving up financial success," says Williams.

Solomon, also a professor with a long history of service to the academy and the profession, adds that: "The academic life is a calling. It's an opportunity to interact with bright young people, to push the knowledge frontier, and to be part of a dynamic intellectual community that promises challenge and fulfillment."

SIDEBAR #1From the Conference Room to the Classroom

Jaimi Goodfriend had more than 10 years of experience in finance and an MS and MBA from Northwestern when she approached David Ikenberry, who was then chair of the ILLINOIS finance department, with a proposition. With an interest in preparing students for the working world, she had written a syllabus outlining a plan for teaching a course on investment analysis. Ikenberry liked what he saw and offered Goodfriend the opportunity to teach an eight-week module on a trial basis to see if it was a match for the department and for her.

That was four years ago, and now Goodfriend, an adjunct lecturer, commutes two days a week to Urbana-Champaign from Chicago, where she has a consulting practice and works for a firm that offers predictive trading systems. She brings her experience in active trading, security analysis, and portfolio analytics to the classroom, teaching courses on options, futures, and financial derivatives.

Goodfriend is part of a growing number of experienced professionals who are following their passion for teaching while at the same time helping to stem the tide of the looming Ph.D. shortage in business. In 2009, she completed the professionally qualified (PQ) bridge program through the Association to Advance Collegiate Schools of Business (AACSB), an intensive week-long program that focuses on course and classroom organization and structure, teaching platform skills, testing strategies, classroom management, and, what Goodfriend describes as "methods that create the best learning environment for the students."

Like other ILLINOIS faculty members, Goodfriend is exceptionally talented, but she is a rarity in the College of Business, where Ph.D. credentials are the faculty standard and very few adjunct positions are available.

Heitor Almeida, professor of finance and director of the department's Ph.D. program, says while ILLINOIS is not seeing the shortage of Ph.D. candidates or faculty that is reported elsewhere, he recognizes the value that faculty members with real-life experience and current professional affiliations bring to the classroom.

"Most of our students are looking for jobs in the industry, so having someone who works in the finance profession gives students a perspective on the real work world and contacts in that world that can be very helpful as they explore their career paths," he says. Plus, PQ faculty can fill a void in curriculum offerings by bringing their expertise in areas of finance that are on the cutting edge of practice. "While a candidate with experience and a Ph.D. is ideal, there are experienced, talented people with a passion for teaching who don't have the doctorate but are important assets to rounding out a program."

Says Goodfriend, "I absolutely love teaching and I also love working in the markets. As an adjunct lecturer, I have the best of both worlds."

SIDEBAR #2The Trend at Illinois

Data indicates that across the country there is a growing trend of fewer business faculty and yet more high school graduates wanting to study business in college. For many U.S. universities, that leads to enrollment limitations and fewer spots for incoming business students, with accounting being hit hardest because of the faculty shortage.
In fact, the AICPA's 2009 report on trends in the supply of accounting graduates states that:

"Capacity constraints in accounting programs continue to be a concern, one likely to be exacerbated by current economic conditions. At AACSB accounting accredited programs, 16% report having to turn away an average of 56 qualified candidates. AACSB business accredited programs report a modest 6% with enrollment limitations, but they average declining admission to 134 candidates."

ILLINOIS defies the trend of the disappearing doctoral student. The College's cadre of Ph.D. students is strong in numbers and caliber, with 98 candidates currently working toward their doctoral degrees. In addition, the numbers of graduate students and faculty members at ILLINOIS are steady or increasing and program reputations and rankings continue to be strong across the board.